One-On-One With The New CEO Of Linden Lab

In an interview with InformationWeek, the incoming CEO of Linden Lab said he's fascinated by businesses that grow up in Second Life. He also paid tribute to the "largely unfettered" creativity of the Second Life community. And he declined to comment about whether he's preparing the company for IPO or sale.

In an interview with InformationWeek, the incoming CEO of Linden Lab said he's fascinated by businesses that grow up in Second Life. He also paid tribute to the "largely unfettered" creativity of the Second Life community. And he declined to comment about whether he's preparing the company for IPO or sale.Mark Kingdon comes to Linden Lab with a varied background in the tech industry. Organic, where he was most recently CEO, is a Web development and online marketing agency. And he also has 12 years experience with PricewaterhouseCoopers, where he was most recently a senior partner.

On paper, Kingdon has just about as close to a perfect resume for the job of Linden Lab CEO as you can expect. The Organic experience presumably makes him comfortable working with idiosyncratic, creative people. On the other hand, the experience at button-down PWC will hopefully help empower him to inject some starch and discipline into Linden Lab.

Kingdon said he joined Organic in 2001, and took it private. "Organic was a massive turnaround and repositioning exercise, and it's been very successful and today it's considered a market leader in its category," Kingdon said.

At PWC, Kingdon said, "the thing I did last before I left was manage premerger planning and postmerger implementation when PWC and Coopers & Lybrand merged." It was, he said, the largest merger in the history of global services. "It was a massive undertaking to connect those cultures," he said.

I asked Kingdon if he was planning to maneuver Linden Lab toward an IPO or acquisition by another company. He said: "My focus at Linden Lab is to help the company achieve its potential and my focus is really going to be on Second Life and making it an incredibly vibrant experience and economy." He declined to answer specifically.

Kingdon describes himself as a "casual user" of Second Life, who had an avatar, with the Second Life name Markis Voom, for a year. His new avatar name as CEO will be M Linden.

He said his first priority as CEO will be to "listen and learn" from users -- known as "residents" in Second Life jargon -- and the Linden Lab team. He said improving stability and usability will be important. "I am an experienced designer at heart, and that will be an area I take personal interest in."

I asked him about big corporate investments in Second Life. He responded: "When big corporations went into Second Life 12 to 18 months ago, it was probably the right place at the wrong time. It was a time when big brands were making a lot of investments or doing trials in all kinds of social computing and social media platforms, and they learned about what worked and what didn't," he said. Kingdon said the Second Life world needs to develop more, with better experiences for residents, and a critical mass of population.

He added, "One thing that's interesting to watch is the development of indigenous brands in Second Life." Popular dance clubs, shops, and locations have the potential to grow into businesses that are impressive by real-world standards. Dance Island is one example, and Frank's Place Jazz and Dance Club -- which he said he personally enjoys -- is another. "These places start to develop and evolve a following and that's what a brand is," he said.

"What's so intriguing to me about Second Life is that it's developing in largely an unfettered way, and I think that's a very good thing, because it sparks creativity, and lets the best things rise to the top," he said.

Kingdon is right about the indigenous brands. If you think about the Internet businesses that have proven really exciting and transformative, they're companies that were founded as Internet businesses to begin with: Google, eBay, Amazon.com, Yahoo, Netflix, etc. They often succeeded in spite of competition from established real-world companies: Amazon.com trounced Barnes & Noble and later, Wal-Mart, even though those companies have decades more experience in the businesses Amazon was entering. Likewise, Netflix is clobbering Blockbuster in online video rentals.

What are Linden Lab's problems? Well, first off, the platform is extraordinarily unstable, prone to frequent crashes and often-unpredictable hardware incompatibilities. Linden Lab repeatedly stumbles in communicating with Second Life businesses -- see, for example, the recent kerfuffle over Linden Lab's trademarks; the company several weeks ago started cracking down on people using its trademarks without permission. That left in-world businesses and groups with the name "Second Life" scrambling about whether they would have to change their brand, which is annoying and expensive for any business.

And the numbers tell more about Linden Lab's problems. On Monday, I was a guest speaker, along with Steve Prentice of Gartner, at a business seminar inside Second Life called Metanomics, where I talked about the extreme difficulties Linden Lab is now facing. Cornell University's Robert Bloomfield, who moderated the discussion, transcribed about three paragraphs in which I summed up the challenges Linden Lab faces. I talked about the qualities a new CEO would need. Ironically, this presentation was a day before the Kingdon announcement, and you can see that Kingdon's resume is pretty close to my prescription.

Linden Lab CFO John Zdanowski, known in Second Life as Zee Linden, took issue with my description of Linden Lab as being in a very difficult spot. He said Linden Lab is not in crisis. And he makes some good points.

Most important, he said the company is profitable.

Moreover, as he notes in a blog post more than a week ago, the Second Life economy is still generating impressive growth: User-to-user transactions grew almost 34% since the low point after the gambling ban, total user hours grew 15% from the fourth quarter of 2007 to the first quarter of 2008. Peak concurrent users -- the number of users logged in simultaneously -- grew almost 14%, from 58,000 in the fourth quarter to 66,000 in the first quarter. And more.

But one very important statistic is flat, and it casts a shadow over everything: The number of active users was 544,000 in March, up a scant 1% since December, and about the same as it's been since the summer. Active users are measured by Linden Lab as users who spend more than one hour per month in-world. Second Life isn't attracting new, active users -- people are continuing to try it, but they're not sticking.

That's a crisis, and it's one that hopefully Kingdon will be able to turn around.

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